Section 122 Tariff Explained — The 10% Global Baseline That Changed Everything
On February 24, 2026, the United States imposed a 10% ad valorem surcharge on virtually all imports entering the country. Not from one country. Not on one product category. On nearly everything, from everywhere.
The authority behind it -- Section 122 of the Trade Act of 1974 -- had never been used before. Four days earlier, the Supreme Court had struck down the administration's IEEPA-based tariffs as unconstitutional. Section 122 was the emergency replacement. It landed in days, and it reshaped the economics of importing into the US overnight.
This guide explains what Section 122 is, why it was invoked, who is exempt, when it expires, and what importers need to do before July. For the full picture of how all US tariff layers work together, see our Complete Guide to US Import Tariffs in 2026.
What Is Section 122?
Section 122 of the Trade Act of 1974 gives the President authority to impose temporary import surcharges to address balance-of-payments problems -- situations where the US is sending substantially more money abroad for imports than it receives from exports.
The statute has three hard constraints:
| Constraint | Limit |
|---|---|
| Maximum rate | 15% ad valorem |
| Maximum duration | 150 days |
| Trigger | "Large and serious" balance-of-payments deficit |
Congress designed Section 122 as an emergency stabilization tool, not a permanent trade policy lever. The 150-day clock starts on the date the proclamation takes effect and cannot be extended under the same authority. If the President wants tariffs beyond 150 days, a different legal basis is required.
Before February 2026, Section 122 had never been invoked. It sat unused in the US Code for over 50 years.
The Backstory: How We Got Here
IEEPA Tariffs Struck Down
Throughout 2025, the administration used the International Emergency Economic Powers Act (IEEPA) as its primary tariff authority, imposing steep country-specific tariffs under a declared national emergency. Legal challenges mounted immediately.
On February 20, 2026, the Supreme Court ruled in a 6-3 decision that IEEPA does not authorize the imposition of tariffs. The court held that IEEPA's grant of economic emergency powers covers sanctions, asset freezes, and transaction blocks -- but not duties on imports, which are a power reserved to Congress and delegated only through specific trade statutes.
The ruling voided every IEEPA-based tariff overnight. Hundreds of billions of dollars in tariff revenue disappeared from projections. The administration needed a replacement authority it could invoke immediately, without Congressional approval.
Section 122 Invoked
Four days later, on February 24, 2026, the President signed a proclamation invoking Section 122, citing the US trade deficit as a balance-of-payments emergency. The proclamation was published as FR Doc 2026-03824 in the Federal Register.
The rate was set at 10% ad valorem -- below the 15% statutory cap, leaving room if an increase were needed. It applied to imports from every country, with a narrow set of exemptions.
What the 10% Surcharge Covers
The Section 122 surcharge applies to nearly all goods imported into the United States, regardless of country of origin. It is collected by CBP at the time of entry and is additional to any existing duty rate in the Harmonized Tariff Schedule.
If your product has a 4% base rate under the HTS, your total duty is now at least 14%. If it is also subject to Section 301 tariffs, those stack too. Use our HTS lookup tool to check your product's full duty exposure.
Example: Duty Stacking in Practice
| Product | Base Rate | Section 122 | Section 301 | Total Duty |
|---|---|---|---|---|
| Italian olive oil (HTS 1509.10) | 3.4 cents/kg | 10% | -- | ~13% effective |
| Japanese auto parts (HTS 8708) | 2.5% | 10% | -- | 12.5% |
| Chinese electronics (HTS 8471) | 0% | 10% | 25% (List 3) | 35% |
| German industrial valves (HTS 8481) | 2% | 10% | -- | 12% |
| Vietnamese furniture (HTS 9403) | 0% | 10% | -- | 10% |
Who Is Exempt
The proclamation carves out a specific set of goods from the 10% surcharge:
| Exemption | Details |
|---|---|
| USMCA-qualifying goods from Canada/Mexico | Goods that meet USMCA rules of origin are exempt. Roughly 85% of Canadian and Mexican exports to the US qualify. The remaining 15% -- goods that do not meet origin rules -- pay the 10%. See our USMCA rules of origin guide. |
| Goods already under Section 232 | Steel, aluminum, copper, semiconductors, and their derivatives already face 25-50% Section 232 tariffs. They are exempt from Section 122 to avoid double-stacking on the same legal theory. |
| Civil aircraft and parts | Covered under existing international agreements (the WTO Agreement on Trade in Civil Aircraft). |
| Humanitarian donations | Goods donated for charitable purposes and imported by qualifying organizations. |
| Informational materials | Books, films, artwork, and similar materials protected under the Berman Amendment. |
| CAFTA-DR textiles and apparel | Qualifying textile and apparel goods from Central American and Dominican Republic free trade agreement partners. |
The USMCA exemption is the big one. If you import from Canada or Mexico and your goods meet the rules of origin, you avoid the surcharge entirely. If they do not meet origin rules -- because too much content comes from non-USMCA countries -- you pay 10% like everyone else. Getting your origin documentation right is now worth real money.
The 150-Day Clock: What Happens on July 24, 2026
Section 122 tariffs expire by law on July 24, 2026 -- exactly 150 days after the February 24 effective date. The President cannot extend them under Section 122. The statute does not allow it.
But do not assume the tariffs will simply disappear.
Section 301 Investigations Timed as Replacements
In March 2026, USTR opened Section 301 investigations into 16 countries covering shipbuilding subsidies, digital services taxes, agricultural barriers, and IP enforcement. The investigation timelines are structured to produce findings and recommended tariff actions by late July 2026 -- just as Section 122 expires.
This is not a coincidence. The administration has publicly described Section 122 as a "bridge" to more targeted, legally durable tariff authority under Section 301. The likely outcome:
- Section 122 expires on July 24.
- Section 301 tariffs on some or all of the 16 countries take effect on or around the same date.
- The rates may vary by country and product -- potentially higher than 10% for some, lower or zero for others.
Importers should plan for continuity of tariff burden, not relief.
Impact by the Numbers
The Section 122 surcharge pushed the average effective US tariff rate to approximately 11%, the highest since 1943, according to the Yale Budget Lab. For context, the average effective rate was 2.4% in 2024.
Who Is Hit Hardest
European specialty goods. Wine, cheese, olive oil, and luxury goods from the EU previously entered at low or zero duty rates. A bottle of French wine that paid 6.3 cents per liter now faces 10% ad valorem on top of that -- a meaningful increase on a $15-20 bottle. Italian Parmigiano-Reggiano, previously at $2.15/kg, now carries an additional 10% surcharge.
Japanese and Korean electronics and auto parts. Japan and South Korea are major exporters of semiconductors (not covered by Section 122 due to Section 232 exemption), but their auto parts, consumer electronics, and industrial components are fully exposed. A $400 Japanese transmission component now carries $40 in Section 122 duties alone.
Southeast Asian goods. Many importers spent 2019-2025 moving supply chains out of China to Vietnam, Thailand, Indonesia, and Malaysia to avoid Section 301 tariffs. Those goods now face 10% under Section 122. The cost advantage of relocating out of China has narrowed significantly -- Vietnamese furniture that used to enter duty-free now pays 10%, while the same Chinese-origin furniture pays 10% Section 122 plus 25% Section 301.
Dollar Impact on Common Imports
| Product | Annual Import Volume | Approx. Section 122 Cost |
|---|---|---|
| EU wine and spirits | $7.2B | ~$720M |
| Japanese auto parts | $13.8B | ~$1.38B |
| Vietnamese electronics | $9.1B | ~$910M |
| Korean consumer goods | $6.4B | ~$640M |
| Indian textiles | $8.7B | ~$870M |
What Importers Should Do Right Now
1. Review your full HTS schedule. The 10% applies broadly, but confirm exactly which of your products are covered and which fall into an exemption. Use our HTS lookup tool to check every code you import under.
2. Check USMCA eligibility. If you import from Canada or Mexico, verify whether your goods meet USMCA rules of origin. Goods that qualify are exempt from the 10% surcharge. Goods that fall short are not. The difference is worth auditing every line item. Read our USMCA rules of origin guide for the specifics.
3. Plan for July 24. Do not assume the 10% goes away. Build scenarios for Section 301 replacement tariffs at 10%, 15%, and 25% on your key products. Price your Q3 and Q4 inventory accordingly.
4. Review contracts. Check whether your purchase agreements have tariff pass-through clauses. If you are absorbing the 10% surcharge now, determine whether you can renegotiate before replacement tariffs take effect.
5. Monitor Federal Register notices. USTR findings on the 16-country Section 301 investigations will be published as Federal Register documents. Changes can come with as little as 15 days' notice.
Key Takeaways
- Section 122 imposes a 10% ad valorem surcharge on virtually all US imports, effective February 24, 2026.
- It was invoked after the Supreme Court struck down IEEPA-based tariffs, using a never-before-used authority from the Trade Act of 1974.
- USMCA-qualifying goods, Section 232 products, civil aircraft, and humanitarian donations are exempt.
- The surcharge expires by law on July 24, 2026 -- but Section 301 investigations are timed to produce replacement tariffs by the same date.
- The average US tariff rate is now 11%, the highest since 1943.
For how Section 122 fits alongside Section 301, Section 232, and other tariff layers, read our Complete Guide to US Import Tariffs in 2026.
Need to know exactly how the 10% surcharge affects your products? TariffDesk's tariff tracker monitors every Federal Register notice and HTS update in real time -- including the July 24 expiration and whatever replaces it. Start monitoring your HTS codes →